Bipartisan Commission Issues Strategy to Address Long-Term U.S. Energy Challenges

Detailed Recommendations on Oil Security, Climate Change, Natural Gas,

Nuclear Energy, and Other Key Topics the Result of 2 Years of Research

and Consultation



Consensus Plan; Group to Spend 2005 Advocating Package



Dec 08, 2004, 00:00 ET from National Commission on Energy Policy

    WASHINGTON, Dec. 8 /PRNewswire/ -- A bipartisan group of top energy
 experts from industry, government, labor, academia, and environmental and
 consumer groups today released a consensus strategy, more than two years in
 the making, to address major long-term U.S. energy challenges.  The report,
 "Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's Energy
 Challenges," contains detailed policy recommendations for addressing oil
 security, climate change, natural gas supply, the future of nuclear energy,
 and other long-term challenges, and is backed by more than 30 original
 research studies.
     "Political and regional polarization has produced an energy stalemate,
 preventing America from adopting sensible approaches to some of our biggest
 energy problems," said John W. Rowe, Commission co-chair and Chairman and CEO
 of Exelon Corp.  "Our Commission reached consensus on effective policies
 because of a willingness to take on cherished myths from both right and left.
 We believe that this package of recommendations can be of value to Congress
 and the Administration in energy legislation next year and beyond."
     "Taken together, the Commission's recommendations aim to achieve a gradual
 but decisive shift in the nation's energy policy, toward one that directly
 addresses our long-term oil, climate, electricity supply, and technology
 challenges," said William K. Reilly, former EPA Administrator and Commission
 co-chair.  "Oil reliance is a fact we will face for some time.  So we
 recommend incentives to spur global oil production, to increase domestic
 vehicle fuel economy, and to increase investment in alternative fuels.  Our
 climate change plan would both limit greenhouse gas emissions and cap the
 costs of doing so.  At the same time, it provides incentives for low- and non-
 carbon sources like natural gas, renewable energy, nuclear energy, and
 advanced coal technologies with carbon capture and sequestration, as well as
 for increased efficiency of energy end use.  We are proposing programs that
 can work in the real world."
     "It's essential to take some prudent steps now to avoid intolerable costs
 and impacts later," said John Holdren, Heinz Professor of Environmental Policy
 at Harvard University and Commission co-chair.  "The task of energy policy is
 to ensure the reliable and affordable energy services that a prosperous
 economy requires while simultaneously limiting the risks and impacts from
 overdependence on oil, from global climate change, and from other
 environmental and political liabilities of the available energy-supply
 options.  Meeting this challenge requires measures to encourage increased use
 of the best available technologies for energy supply and energy end-use
 efficiency in the years immediately ahead, as well as increased investments in
 energy research and development to improve the options available to us in the
 future."
 
     To enhance U.S. oil security, the Commission recommends:
 
     * Increasing and diversifying world oil production while expanding the
       global network of strategic petroleum reserves.
 
     * Significantly strengthening federal fuel economy standards beginning no
       later than 2010 for cars and light trucks, giving due consideration to
       vehicle performance, safety, job impacts and competitiveness concerns.
 
     * Reforming the 30-year-old Corporate Average Fuel Economy (CAFE) program
       to allow more flexibility and limit compliance costs.
 
     * Providing $3 billion over ten years in manufacturer and consumer
       incentives to encourage domestic production and boost sales of efficient
       hybrid and advanced diesel vehicles.
 
     * Developing non-petroleum transportation fuel alternatives, particularly
       ethanol and clean bio-diesel from waste products and biomass.
 
 
     The Commission estimates its recommendations could reduce U.S. oil
 consumption in 2025 by 10-15 percent or 3-5 million barrels per day.
     "Raising CAFE standards and reforming the program go hand in hand," said
 Holdren.  "The $3 billion package of consumer and manufacturer incentives,
 together with important program reforms, will enable domestic manufacturers to
 significantly raise fuel economy by the end of the decade while protecting
 U.S. jobs."
     Regarding oil supply, the Commission believes the U.S. government should
 apply diplomatic pressure to encourage nations with significant but
 underdeveloped oil reserves to allow foreign investment in their energy
 sectors to increase and diversify global oil production.  To the extent that
 unilaterally imposed U.S. economic sanctions may be limiting investment in
 foreign energy markets and constraining world oil supply, the oil security
 implications of these sanctions should be carefully considered.  In focusing
 on world oil supply, the Commission report notes that "reducing vulnerability
 to high oil prices and supply disruptions are more meaningful and ultimately
 achievable policy goals than a misplaced focus on energy independence."
     "The near-term key to reducing oil price shocks is curbing U.S. demand and
 increasing world supply," said Reilly.  "We have to do both.  We also have to
 make big investments in alternatives like bio-fuels made from domestic crops
 and agricultural waste."
 
     To reduce risks from climate change, the Commission recommends:
 
     * Implementing in 2010 a mandatory, economy-wide tradable-permits system
       designed to curb future growth in the nation's emissions of greenhouse
       gases while capping initial costs to the U.S. economy at $7 per metric
       ton of carbon dioxide-equivalent.
 
     * Linking subsequent action to reduce U.S. emissions with efforts by other
       developed and developing nations to achieve comparable emissions
       reductions via a review of program efficacy and international progress
       in 2015.
 
 
     "The Commission believes the United States must take responsibility for
 addressing its contribution to the risks of climate change," said Rowe.  "But
 we must do so in a manner that recognizes the global nature of the challenge
 and does not harm the competitive position of U.S. businesses internationally.
 Our plan meets those goals."
     Under the Commission's proposal, the U.S. government in 2010 would begin
 issuing permits for greenhouse gas (GHG) emissions based on an annual
 emissions target that reflects a 2.4 percent per year reduction in the average
 GHG intensity of the economy (where intensity is measured in tons of emissions
 per dollar of GDP).  An emissions intensity metric is also the basis of
 President Bush's plan, which calls for voluntary GHG intensity reductions of
 1.8 percent per year from 2002-2012.
     Under the Commission's proposal, most GHG permits would be issued at no
 cost to existing emitters, but a small pool -- 5 percent at the outset,
 increasing gradually thereafter to a maximum of 10 percent -- would be
 auctioned to accommodate new entrants, stimulate the market in emission
 permits, and fund research and development of new technologies.
     The Commission's proposal also includes a "safety valve" or cost-capping
 mechanism to limit the total cost of the program to the U.S. economy.  The
 cost cap allows additional permits to be purchased from the government at an
 initial price of $7 per metric ton of carbon dioxide (CO2)-equivalent.  The
 safety valve price would increase by 5 percent per year in nominal terms to
 generate a gradually stronger market signal for reducing emissions without
 prematurely displacing existing energy infrastructure.
     "The Commission's climate change proposal is designed to be a logical next
 step for the nation, building upon many of the themes and features of the
 current Administration's program," Reilly said.  "Such a program is entirely
 compatible with separate legislative efforts by the Bush Administration and
 the Congress to address nitrogen, mercury and sulfur emissions from electric
 power generation.  The Commission did not study specific legislation, but
 supports multi-pollutant approaches as a means of improving public health,
 providing business certainty and accelerating investments in cleaner burning
 technologies, such as IGCC."
     "The Commission's climate plan explicitly caps the total cost to the
 economy while reducing emissions.  Even in 2020, the estimated cost of the
 plan per household will only be $30-100 a year," said Reilly.  "This is no
 Kyoto."
     In 2015, and every five years thereafter, Congress would review the
 program and evaluate whether emissions control progress by major trading
 partners and competitors (including developing countries such as China and
 India) supports its continuation.
     Conservative modeling analyses suggest that the Commission's proposal
 would reduce total emissions in 2020 by approximately 540 million metric tons.
 Emission reductions could be much higher -- as much as 1 billion metric tons
 in 2020 -- if the investments in technology innovation and efficiency proposed
 elsewhere in this report further reduce abatement costs.
     To improve the energy efficiency of the U.S. economy, the Commission
 recommends:
 
     * Updating and expanding efficiency standards for new appliances,
       equipment, and buildings to capture additional cost-effective
       energy-saving opportunities.
 
     * Integrating improvements in efficiency standards with targeted
       technology incentives, R&D, consumer information, and programs sponsored
       by electric and gas utilities.
 
     * Pursuing cost-effective efficiency improvements in the industrial
       sector.
 
 
     Efficiency improvements in buildings and industry are important
 complements to the Commission's efficiency recommendations for the
 transportation sector, which include fuel-saving opportunities in the heavy-
 duty truck fleet, which is responsible for roughly 20 percent of
 transportation energy consumption, but is not subject to fuel economy
 regulation, and in the existing vehicle fleet where a substantial opportunity
 exists to improve efficiency by, for example, mandating that replacement tires
 have rolling-resistance characteristics equivalent to the original equipment
 tires used on new vehicles.
     "Absent substantial gains in the energy efficiency of motor vehicles,
 buildings, appliances, and equipment, it becomes difficult to imagine how
 energy supplies, and especially clean energy supplies, can keep pace with
 increased U.S. and global demand," said Holdren.
 
     To increase U.S. energy supply, the Commission recommends:
 
     Natural Gas: To diversify and expand the nation's access to natural gas
 supplies, the Commission recommends:
 
     * Adopting effective public incentives for the construction of an Alaska
       natural gas pipeline.
 
     * Addressing obstacles to the siting and construction of infrastructure
       needed to support increased imports of liquefied natural gas (LNG).
 
     "Natural gas is the key bridge fuel for electricity over the next several
 decades," said Rowe.  "We simply must find ways to increase supply to U.S.
 markets."
 
     Advanced Coal Technologies:  To enable the nation to continue to rely upon
 secure, domestic supplies of coal to meet future energy needs while addressing
 the climate risks associated with greenhouse gas emissions, the Commission
 recommends:
 
     * Providing $4 billion over ten years in early deployment incentives for
       integrated gasification combined cycle (IGCC) coal technology.
 
     * Providing $3 billion over ten years in public incentives to demonstrate
       commercial-scale carbon capture and geologic sequestration at a variety
       of sites.
 
     Coal gasification holds promise for economically capturing carbon
 emissions while also reducing emissions of pollutants like mercury and sulfur
 dioxide.  The process is commonly used in the manufacture of chemicals, but --
 with the exception of a handful of demonstration facilities -- has not yet
 been widely applied to producing power on a commercial scale.
     "Coal's abundance in the United States, and in major developing countries
 like China and India, makes finding clean ways to use it among our highest
 priorities," said Reilly.  "Coal gasification, when combined with carbon
 sequestration, has the potential to revolutionize energy production."
 
     Nuclear Power:  To help enable nuclear power to continue to play a
 meaningful role in meeting future energy needs, the Commission recommends:
 
     * Fulfilling existing federal commitments on nuclear waste management
 
     * Providing $2 billion over ten years from federal research, development,
       demonstration, and deployment budgets for the demonstration of one to
       two new advanced nuclear power plants.
 
     * Significantly strengthening the international non-proliferation regime.
 
     "The contribution of nuclear energy to meeting the nation's electricity
 needs will decline absent concerted efforts to address concerns about cost,
 susceptibility to accidents and terrorist attacks, management of radioactive
 wastes, and proliferation risks," said Holdren.  "Given the risks from climate
 change and the challenges that face all of the low-carbon and no-carbon supply
 options, it would be imprudent in the extreme not to try to keep the nuclear
 option open."
 
     Renewable Energy:  To expand the contribution of clean, renewable energy,
 the Commission recommends:
 
     * Increasing federal support for renewable technology research and
       development by $360 million annually, targeted at overcoming key hurdles
       in cost competitiveness and early deployment.
 
     * Extending the federal production tax credit for a further four years
       (i.e., from 2006 through 2009), and expanding eligibility to all
       non-carbon energy sources, including solar, geothermal, new hydropower
       generation, next generation nuclear, and advanced fossil fuel generation
       with carbon capture and sequestration.
 
     * Supporting ongoing efforts by the Federal Energy Regulatory Commission
       (FERC) to promote market-based approaches to integrating intermittent
       resources into the interstate grid system.
 
     * Establishing a $1.5 billion program over ten years to increase domestic
       production of advanced non-petroleum transportation fuels from biomass
       (including waste).
 
     "The Commission's renewable energy proposals are aimed at finding ways to
 reduce costs and bring competitive sources to market," said Reilly.  "Any
 scenario for tackling climate change and developing clean domestic energy
 resources must involve expanded use of renewable power."
 
     To strengthen energy supply infrastructure, the Commission recommends:
 
     * Reducing barriers to the siting of critical energy infrastructure.
 
     * Protecting critical infrastructure from accidental failure and terrorist
       threats.
 
     * Supporting a variety of generation resources -- including both large
       scale power plants and small scale "distributed" and/or renewable
       generation -- and demand reduction (for both electricity and natural
       gas), to ensure affordable and reliable energy service for consumers.
 
     * Encouraging increased transmission investment and deployment of new
       technologies to enhance the availability and reliability of the grid,
       in part by clarifying rules for cost-recovery.
 
     * Enhancing consumer protections in the electricity sector and
       establishing an integrated, multi-pollutant program to reduce power
       plant emissions.
 
     "There is a national imperative to strengthen the systems that deliver
 energy," said Rowe.  "Priorities include siting reforms to enable the
 expansion and construction of needed energy facilities, greater efforts to
 protect the nation's energy systems from terrorist attack, and reforms to
 improve the reliability and performance of the electricity sector."
 
     To promote the development of improved energy technologies for the future,
 the Commission recommends:
 
     * Doubling of federal government funding for energy research and
       development, while improving the management of these efforts and
       promoting effective public-private partnerships.
 
     * Increasing incentives for private sector energy research, development,
       demonstration, and early deployment (ERD(3)).
 
     * Expanding investment in cooperative international ERD(3)initiatives and
       improving coordination among relevant federal agencies.
 
     * Providing early deployment incentives for coal gasification and carbon
       sequestration; domestically produced efficient vehicles; domestically
       produced alternative transportation fuels; and advanced nuclear
       reactors.
 
 
     "Overcoming the energy challenges faced by the United States and the rest
 of the world requires technologies superior to those available today," said
 Holdren.  "To accelerate the development and deployment of these technologies,
 the federal government must increase its own investments in energy-technology
 innovation as well as its collaboration in this domain with the private
 sector, with states, and with other nations."
     The Commission notes that investments by both the private and public
 sectors in energy research, development, demonstration, and early deployment
 have been falling short of what is likely to be needed to meet the energy
 challenges confronting the nation and the world in the 21st century.
 
     Revenue Neutrality
     The Commission proposes that the nation devote the resources generated by
 the sale of greenhouse gas emissions permits to enhance the development and
 deployment of improved energy technologies.  The approximately $36 billion
 that Commission analysis indicates will be generated over ten years by the
 proposed greenhouse gas tradable-permits program -- most of which will come
 from auctioning a small portion of the overall permit pool -- offsets the
 specific additional public investments it recommends overall.
     The Commission's recommendations were developed in more than a dozen two-
 day meetings over two years and are informed by over 30 original, Commission-
 sponsored studies on major energy topics.  The group also met with hundreds of
 leading stakeholders, including industry; environmental groups; state, local,
 and federal governmental officials; labor and consumer groups; agricultural
 interests; and many others.  A full list of consulted organizations, copies of
 the Commission's report, supporting research studies, and other information
 can be found on the Commission's website at:  http://www.energycommission.org.
     The Commission will spend 2005 advocating for the ideas in its strategy to
 Congress, the Administration, the States, industry, and other key
 stakeholders.
     "For more than 30 years, Energy has been the graveyard of many a brave
 policy titan," said Reilly.  "But our analysis shows that these recommended
 policies can curb U.S. oil use, begin to address greenhouse gas emissions,
 develop viable new technologies, and put the U.S. in a much stronger energy
 posture.  We intend to carry that message to the highest levels throughout
 2005."
 
     The National Commission on Energy Policy was founded in 2002 by the
 William and Flora Hewlett Foundation, and its partners -- The Pew Charitable
 Trusts, the John D. and Catherine T. MacArthur Foundation, the David and
 Lucile Packard Foundation, and the Energy Foundation.
 
     The members of the National Commission on Energy Policy are:
 
     John P. Holdren
     Co-Chair
     Teresa and John Heinz Professor of Environmental Policy,
     Harvard University
 
     William K. Reilly
     Co-Chair
     Founding Partner, Aqua International Partners; former Administrator,
     U.S. Environmental Protection Agency
 
     John W. Rowe
     Co-Chair
     Chairman and CEO, Exelon Corporation
 
     Philip R. Sharp
     Congressional Chair
     Senior Policy Advisor, Van Ness Feldman; Senior Advisor, Lexecon, Inc.;
     former U.S. Representative, Indiana
 
     Marilyn Brown
     Director, Energy Efficiency and Renewable Energy Program,
     Oak Ridge National Laboratory
 
     Ralph Cavanagh
     Senior Attorney and Co-Director, Energy Program, Natural Resources Defense
     Council
 
     Archie W. Dunham
     Chairman, ConocoPhillips, Inc. (1999-2004)
 
     Rodney Ellis
     State Senator, Texas
 
     Leo Gerard
     International President, United Steelworkers of America
 
     F. Henry Habicht
     CEO, Global Environment and Technology Foundation; former Deputy
     Administrator, U.S. Environmental Protection Agency
 
     Mario J. Molina
     Institute Professor, Massachusetts Institute of Technology
 
     Sharon L. Nelson
     Chief, Consumer Protection Division, Washington Attorney's General Office;
     Chair, Board of Directors, Consumers Union
 
     Linda Stuntz
     Stuntz, Davis & Staffier; former Deputy Secretary of Energy
 
     Susan Tierney
     Managing Principal, The Analysis Group; former Assistant Secretary of
     Energy
 
     James Woolsey
     Vice President, Booz Allen Hamilton; former Director of Central
     Intelligence
 
     Martin B. Zimmerman
     Clinical Professor of Business, Ross School of Business, University of
     Michigan; Group Vice President, Corporate Affairs, Ford Motor Company
     (2001 - 2004)
 
     Jason Grumet, Executive Director
 
 

SOURCE National Commission on Energy Policy
    WASHINGTON, Dec. 8 /PRNewswire/ -- A bipartisan group of top energy
 experts from industry, government, labor, academia, and environmental and
 consumer groups today released a consensus strategy, more than two years in
 the making, to address major long-term U.S. energy challenges.  The report,
 "Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's Energy
 Challenges," contains detailed policy recommendations for addressing oil
 security, climate change, natural gas supply, the future of nuclear energy,
 and other long-term challenges, and is backed by more than 30 original
 research studies.
     "Political and regional polarization has produced an energy stalemate,
 preventing America from adopting sensible approaches to some of our biggest
 energy problems," said John W. Rowe, Commission co-chair and Chairman and CEO
 of Exelon Corp.  "Our Commission reached consensus on effective policies
 because of a willingness to take on cherished myths from both right and left.
 We believe that this package of recommendations can be of value to Congress
 and the Administration in energy legislation next year and beyond."
     "Taken together, the Commission's recommendations aim to achieve a gradual
 but decisive shift in the nation's energy policy, toward one that directly
 addresses our long-term oil, climate, electricity supply, and technology
 challenges," said William K. Reilly, former EPA Administrator and Commission
 co-chair.  "Oil reliance is a fact we will face for some time.  So we
 recommend incentives to spur global oil production, to increase domestic
 vehicle fuel economy, and to increase investment in alternative fuels.  Our
 climate change plan would both limit greenhouse gas emissions and cap the
 costs of doing so.  At the same time, it provides incentives for low- and non-
 carbon sources like natural gas, renewable energy, nuclear energy, and
 advanced coal technologies with carbon capture and sequestration, as well as
 for increased efficiency of energy end use.  We are proposing programs that
 can work in the real world."
     "It's essential to take some prudent steps now to avoid intolerable costs
 and impacts later," said John Holdren, Heinz Professor of Environmental Policy
 at Harvard University and Commission co-chair.  "The task of energy policy is
 to ensure the reliable and affordable energy services that a prosperous
 economy requires while simultaneously limiting the risks and impacts from
 overdependence on oil, from global climate change, and from other
 environmental and political liabilities of the available energy-supply
 options.  Meeting this challenge requires measures to encourage increased use
 of the best available technologies for energy supply and energy end-use
 efficiency in the years immediately ahead, as well as increased investments in
 energy research and development to improve the options available to us in the
 future."
 
     To enhance U.S. oil security, the Commission recommends:
 
     * Increasing and diversifying world oil production while expanding the
       global network of strategic petroleum reserves.
 
     * Significantly strengthening federal fuel economy standards beginning no
       later than 2010 for cars and light trucks, giving due consideration to
       vehicle performance, safety, job impacts and competitiveness concerns.
 
     * Reforming the 30-year-old Corporate Average Fuel Economy (CAFE) program
       to allow more flexibility and limit compliance costs.
 
     * Providing $3 billion over ten years in manufacturer and consumer
       incentives to encourage domestic production and boost sales of efficient
       hybrid and advanced diesel vehicles.
 
     * Developing non-petroleum transportation fuel alternatives, particularly
       ethanol and clean bio-diesel from waste products and biomass.
 
 
     The Commission estimates its recommendations could reduce U.S. oil
 consumption in 2025 by 10-15 percent or 3-5 million barrels per day.
     "Raising CAFE standards and reforming the program go hand in hand," said
 Holdren.  "The $3 billion package of consumer and manufacturer incentives,
 together with important program reforms, will enable domestic manufacturers to
 significantly raise fuel economy by the end of the decade while protecting
 U.S. jobs."
     Regarding oil supply, the Commission believes the U.S. government should
 apply diplomatic pressure to encourage nations with significant but
 underdeveloped oil reserves to allow foreign investment in their energy
 sectors to increase and diversify global oil production.  To the extent that
 unilaterally imposed U.S. economic sanctions may be limiting investment in
 foreign energy markets and constraining world oil supply, the oil security
 implications of these sanctions should be carefully considered.  In focusing
 on world oil supply, the Commission report notes that "reducing vulnerability
 to high oil prices and supply disruptions are more meaningful and ultimately
 achievable policy goals than a misplaced focus on energy independence."
     "The near-term key to reducing oil price shocks is curbing U.S. demand and
 increasing world supply," said Reilly.  "We have to do both.  We also have to
 make big investments in alternatives like bio-fuels made from domestic crops
 and agricultural waste."
 
     To reduce risks from climate change, the Commission recommends:
 
     * Implementing in 2010 a mandatory, economy-wide tradable-permits system
       designed to curb future growth in the nation's emissions of greenhouse
       gases while capping initial costs to the U.S. economy at $7 per metric
       ton of carbon dioxide-equivalent.
 
     * Linking subsequent action to reduce U.S. emissions with efforts by other
       developed and developing nations to achieve comparable emissions
       reductions via a review of program efficacy and international progress
       in 2015.
 
 
     "The Commission believes the United States must take responsibility for
 addressing its contribution to the risks of climate change," said Rowe.  "But
 we must do so in a manner that recognizes the global nature of the challenge
 and does not harm the competitive position of U.S. businesses internationally.
 Our plan meets those goals."
     Under the Commission's proposal, the U.S. government in 2010 would begin
 issuing permits for greenhouse gas (GHG) emissions based on an annual
 emissions target that reflects a 2.4 percent per year reduction in the average
 GHG intensity of the economy (where intensity is measured in tons of emissions
 per dollar of GDP).  An emissions intensity metric is also the basis of
 President Bush's plan, which calls for voluntary GHG intensity reductions of
 1.8 percent per year from 2002-2012.
     Under the Commission's proposal, most GHG permits would be issued at no
 cost to existing emitters, but a small pool -- 5 percent at the outset,
 increasing gradually thereafter to a maximum of 10 percent -- would be
 auctioned to accommodate new entrants, stimulate the market in emission
 permits, and fund research and development of new technologies.
     The Commission's proposal also includes a "safety valve" or cost-capping
 mechanism to limit the total cost of the program to the U.S. economy.  The
 cost cap allows additional permits to be purchased from the government at an
 initial price of $7 per metric ton of carbon dioxide (CO2)-equivalent.  The
 safety valve price would increase by 5 percent per year in nominal terms to
 generate a gradually stronger market signal for reducing emissions without
 prematurely displacing existing energy infrastructure.
     "The Commission's climate change proposal is designed to be a logical next
 step for the nation, building upon many of the themes and features of the
 current Administration's program," Reilly said.  "Such a program is entirely
 compatible with separate legislative efforts by the Bush Administration and
 the Congress to address nitrogen, mercury and sulfur emissions from electric
 power generation.  The Commission did not study specific legislation, but
 supports multi-pollutant approaches as a means of improving public health,
 providing business certainty and accelerating investments in cleaner burning
 technologies, such as IGCC."
     "The Commission's climate plan explicitly caps the total cost to the
 economy while reducing emissions.  Even in 2020, the estimated cost of the
 plan per household will only be $30-100 a year," said Reilly.  "This is no
 Kyoto."
     In 2015, and every five years thereafter, Congress would review the
 program and evaluate whether emissions control progress by major trading
 partners and competitors (including developing countries such as China and
 India) supports its continuation.
     Conservative modeling analyses suggest that the Commission's proposal
 would reduce total emissions in 2020 by approximately 540 million metric tons.
 Emission reductions could be much higher -- as much as 1 billion metric tons
 in 2020 -- if the investments in technology innovation and efficiency proposed
 elsewhere in this report further reduce abatement costs.
     To improve the energy efficiency of the U.S. economy, the Commission
 recommends:
 
     * Updating and expanding efficiency standards for new appliances,
       equipment, and buildings to capture additional cost-effective
       energy-saving opportunities.
 
     * Integrating improvements in efficiency standards with targeted
       technology incentives, R&D, consumer information, and programs sponsored
       by electric and gas utilities.
 
     * Pursuing cost-effective efficiency improvements in the industrial
       sector.
 
 
     Efficiency improvements in buildings and industry are important
 complements to the Commission's efficiency recommendations for the
 transportation sector, which include fuel-saving opportunities in the heavy-
 duty truck fleet, which is responsible for roughly 20 percent of
 transportation energy consumption, but is not subject to fuel economy
 regulation, and in the existing vehicle fleet where a substantial opportunity
 exists to improve efficiency by, for example, mandating that replacement tires
 have rolling-resistance characteristics equivalent to the original equipment
 tires used on new vehicles.
     "Absent substantial gains in the energy efficiency of motor vehicles,
 buildings, appliances, and equipment, it becomes difficult to imagine how
 energy supplies, and especially clean energy supplies, can keep pace with
 increased U.S. and global demand," said Holdren.
 
     To increase U.S. energy supply, the Commission recommends:
 
     Natural Gas: To diversify and expand the nation's access to natural gas
 supplies, the Commission recommends:
 
     * Adopting effective public incentives for the construction of an Alaska
       natural gas pipeline.
 
     * Addressing obstacles to the siting and construction of infrastructure
       needed to support increased imports of liquefied natural gas (LNG).
 
     "Natural gas is the key bridge fuel for electricity over the next several
 decades," said Rowe.  "We simply must find ways to increase supply to U.S.
 markets."
 
     Advanced Coal Technologies:  To enable the nation to continue to rely upon
 secure, domestic supplies of coal to meet future energy needs while addressing
 the climate risks associated with greenhouse gas emissions, the Commission
 recommends:
 
     * Providing $4 billion over ten years in early deployment incentives for
       integrated gasification combined cycle (IGCC) coal technology.
 
     * Providing $3 billion over ten years in public incentives to demonstrate
       commercial-scale carbon capture and geologic sequestration at a variety
       of sites.
 
     Coal gasification holds promise for economically capturing carbon
 emissions while also reducing emissions of pollutants like mercury and sulfur
 dioxide.  The process is commonly used in the manufacture of chemicals, but --
 with the exception of a handful of demonstration facilities -- has not yet
 been widely applied to producing power on a commercial scale.
     "Coal's abundance in the United States, and in major developing countries
 like China and India, makes finding clean ways to use it among our highest
 priorities," said Reilly.  "Coal gasification, when combined with carbon
 sequestration, has the potential to revolutionize energy production."
 
     Nuclear Power:  To help enable nuclear power to continue to play a
 meaningful role in meeting future energy needs, the Commission recommends:
 
     * Fulfilling existing federal commitments on nuclear waste management
 
     * Providing $2 billion over ten years from federal research, development,
       demonstration, and deployment budgets for the demonstration of one to
       two new advanced nuclear power plants.
 
     * Significantly strengthening the international non-proliferation regime.
 
     "The contribution of nuclear energy to meeting the nation's electricity
 needs will decline absent concerted efforts to address concerns about cost,
 susceptibility to accidents and terrorist attacks, management of radioactive
 wastes, and proliferation risks," said Holdren.  "Given the risks from climate
 change and the challenges that face all of the low-carbon and no-carbon supply
 options, it would be imprudent in the extreme not to try to keep the nuclear
 option open."
 
     Renewable Energy:  To expand the contribution of clean, renewable energy,
 the Commission recommends:
 
     * Increasing federal support for renewable technology research and
       development by $360 million annually, targeted at overcoming key hurdles
       in cost competitiveness and early deployment.
 
     * Extending the federal production tax credit for a further four years
       (i.e., from 2006 through 2009), and expanding eligibility to all
       non-carbon energy sources, including solar, geothermal, new hydropower
       generation, next generation nuclear, and advanced fossil fuel generation
       with carbon capture and sequestration.
 
     * Supporting ongoing efforts by the Federal Energy Regulatory Commission
       (FERC) to promote market-based approaches to integrating intermittent
       resources into the interstate grid system.
 
     * Establishing a $1.5 billion program over ten years to increase domestic
       production of advanced non-petroleum transportation fuels from biomass
       (including waste).
 
     "The Commission's renewable energy proposals are aimed at finding ways to
 reduce costs and bring competitive sources to market," said Reilly.  "Any
 scenario for tackling climate change and developing clean domestic energy
 resources must involve expanded use of renewable power."
 
     To strengthen energy supply infrastructure, the Commission recommends:
 
     * Reducing barriers to the siting of critical energy infrastructure.
 
     * Protecting critical infrastructure from accidental failure and terrorist
       threats.
 
     * Supporting a variety of generation resources -- including both large
       scale power plants and small scale "distributed" and/or renewable
       generation -- and demand reduction (for both electricity and natural
       gas), to ensure affordable and reliable energy service for consumers.
 
     * Encouraging increased transmission investment and deployment of new
       technologies to enhance the availability and reliability of the grid,
       in part by clarifying rules for cost-recovery.
 
     * Enhancing consumer protections in the electricity sector and
       establishing an integrated, multi-pollutant program to reduce power
       plant emissions.
 
     "There is a national imperative to strengthen the systems that deliver
 energy," said Rowe.  "Priorities include siting reforms to enable the
 expansion and construction of needed energy facilities, greater efforts to
 protect the nation's energy systems from terrorist attack, and reforms to
 improve the reliability and performance of the electricity sector."
 
     To promote the development of improved energy technologies for the future,
 the Commission recommends:
 
     * Doubling of federal government funding for energy research and
       development, while improving the management of these efforts and
       promoting effective public-private partnerships.
 
     * Increasing incentives for private sector energy research, development,
       demonstration, and early deployment (ERD(3)).
 
     * Expanding investment in cooperative international ERD(3)initiatives and
       improving coordination among relevant federal agencies.
 
     * Providing early deployment incentives for coal gasification and carbon
       sequestration; domestically produced efficient vehicles; domestically
       produced alternative transportation fuels; and advanced nuclear
       reactors.
 
 
     "Overcoming the energy challenges faced by the United States and the rest
 of the world requires technologies superior to those available today," said
 Holdren.  "To accelerate the development and deployment of these technologies,
 the federal government must increase its own investments in energy-technology
 innovation as well as its collaboration in this domain with the private
 sector, with states, and with other nations."
     The Commission notes that investments by both the private and public
 sectors in energy research, development, demonstration, and early deployment
 have been falling short of what is likely to be needed to meet the energy
 challenges confronting the nation and the world in the 21st century.
 
     Revenue Neutrality
     The Commission proposes that the nation devote the resources generated by
 the sale of greenhouse gas emissions permits to enhance the development and
 deployment of improved energy technologies.  The approximately $36 billion
 that Commission analysis indicates will be generated over ten years by the
 proposed greenhouse gas tradable-permits program -- most of which will come
 from auctioning a small portion of the overall permit pool -- offsets the
 specific additional public investments it recommends overall.
     The Commission's recommendations were developed in more than a dozen two-
 day meetings over two years and are informed by over 30 original, Commission-
 sponsored studies on major energy topics.  The group also met with hundreds of
 leading stakeholders, including industry; environmental groups; state, local,
 and federal governmental officials; labor and consumer groups; agricultural
 interests; and many others.  A full list of consulted organizations, copies of
 the Commission's report, supporting research studies, and other information
 can be found on the Commission's website at:  http://www.energycommission.org.
     The Commission will spend 2005 advocating for the ideas in its strategy to
 Congress, the Administration, the States, industry, and other key
 stakeholders.
     "For more than 30 years, Energy has been the graveyard of many a brave
 policy titan," said Reilly.  "But our analysis shows that these recommended
 policies can curb U.S. oil use, begin to address greenhouse gas emissions,
 develop viable new technologies, and put the U.S. in a much stronger energy
 posture.  We intend to carry that message to the highest levels throughout
 2005."
 
     The National Commission on Energy Policy was founded in 2002 by the
 William and Flora Hewlett Foundation, and its partners -- The Pew Charitable
 Trusts, the John D. and Catherine T. MacArthur Foundation, the David and
 Lucile Packard Foundation, and the Energy Foundation.
 
     The members of the National Commission on Energy Policy are:
 
     John P. Holdren
     Co-Chair
     Teresa and John Heinz Professor of Environmental Policy,
     Harvard University
 
     William K. Reilly
     Co-Chair
     Founding Partner, Aqua International Partners; former Administrator,
     U.S. Environmental Protection Agency
 
     John W. Rowe
     Co-Chair
     Chairman and CEO, Exelon Corporation
 
     Philip R. Sharp
     Congressional Chair
     Senior Policy Advisor, Van Ness Feldman; Senior Advisor, Lexecon, Inc.;
     former U.S. Representative, Indiana
 
     Marilyn Brown
     Director, Energy Efficiency and Renewable Energy Program,
     Oak Ridge National Laboratory
 
     Ralph Cavanagh
     Senior Attorney and Co-Director, Energy Program, Natural Resources Defense
     Council
 
     Archie W. Dunham
     Chairman, ConocoPhillips, Inc. (1999-2004)
 
     Rodney Ellis
     State Senator, Texas
 
     Leo Gerard
     International President, United Steelworkers of America
 
     F. Henry Habicht
     CEO, Global Environment and Technology Foundation; former Deputy
     Administrator, U.S. Environmental Protection Agency
 
     Mario J. Molina
     Institute Professor, Massachusetts Institute of Technology
 
     Sharon L. Nelson
     Chief, Consumer Protection Division, Washington Attorney's General Office;
     Chair, Board of Directors, Consumers Union
 
     Linda Stuntz
     Stuntz, Davis & Staffier; former Deputy Secretary of Energy
 
     Susan Tierney
     Managing Principal, The Analysis Group; former Assistant Secretary of
     Energy
 
     James Woolsey
     Vice President, Booz Allen Hamilton; former Director of Central
     Intelligence
 
     Martin B. Zimmerman
     Clinical Professor of Business, Ross School of Business, University of
     Michigan; Group Vice President, Corporate Affairs, Ford Motor Company
     (2001 - 2004)
 
     Jason Grumet, Executive Director
 
 SOURCE  National Commission on Energy Policy